Toshiba Miss Deadline For Chip Business Deal

Ann Santiago
September 1, 2017

In addition to Western Digital, the consortium includes USA private equity firm KKR & Co and the state-backed Innovation Network of Japan and Development Bank of Japan.

Apple relies on Toshiba's memory chips for iPhones and iPods and wants a continued supply independent of its rival Samsung Electronics, Bloomberg News said, quoting people familiar with the matter.

Under the group's proposal, Toshiba and Bain would own over 40 percent each of Toshiba Memory Corp, the sources said. The three groups are Bain Capital's consortium, which includes the state-backed Innovation Network Corp. of Japan (INCJ), Development Bank of Japan and South Korean chipmaker SK Hynix Co.; a group led by Western Digital that includes USA investment fund Kohlberg Kravis Roberts & well as INCJ and DBJ; and a group involving Taiwanese electronics maker Hon Hai Precision Industry Co. Earlier reports said Bain brought Apple into the bidding group to stay in the running as Toshiba leaned toward a deal with Western Digital.

Toshiba has been attempting to try and sell its chip business, due to billions lost in its U.S. nuclear business Westinghouse, which has gone bankrupt.

Western Digital, Toshiba's business partner, has claimed that a sale of the unit without its consent would breach their joint venture contract. Toshiba Memory is expected to sell for $18 billion, according to press reports. Apple is said to be interested in the business because it would give it greater control over its supply chain. -South Korean Bain Capital consortium as the preferred bidder.

Toshiba is the world's second-biggest maker of memory chips after Samsung.

Western Digital's group is reportedly also backed by INCJ and DBJ.

"That clearly appeals to Toshiba's impatient lenders but there are fundamental differences to resolve and it is still some way from producing a deal that Toshiba could sign". Toshiba had been progressing in talks with Western but Bain Capital is reported to have returned with a bid at the last minute - on Wednesday - which further complicated the issue. Toshiba's relationship with US-based Western Digital has been rocky throughout the auction process, to the point that other bidders were favoured first.

Failure to come to a deal soon could also mean that Toshiba might not be able to obtain necessary regulatory approvals by the end of the financial year in March.

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